According to a news release from S.C. Department of Revenue, January 2018 is the time to start saving receipts.
A new income tax credit going into effect in January is intended to offset the increased motor fuel user fee established by the S.C. Infrastructure and Economic Development Reform Act.
The S.C. Infrastructure and Economic Development Reform Act was passed by the General Assembly in 2017 and includes an increase of 2 cents in the state's motor fuel user fee each July from 2017 to 2022, for a total increase from 16 cents per gallon to 28 cents per gallon. The money raised by the increase will be used for repairs, maintenance and improvements to South Carolina's existing transportation system.
Taxpayers may claim the motor fuel income tax credit when filing their state income tax returns beginning in 2019. This credit is applied to your 2018 S.C. Individual Income Taxes which are filed in 2019.
"The South Carolina Department of Revenue is committed to keeping taxpayers informed on this new legislation and how it can benefit them. We are here to assist all South Carolina taxpayers in understanding and easily complying when claiming the new motor fuel tax credit," Hartley Powell, SCDOR director, said in the release.
What taxpayers need to know
- This is a refundable credit on up to two private motor vehicles or motorcycles per resident taxpayer and is provided to offset the motor fuel user fee increase.
A private passenger motor vehicle is a motor vehicle designed, used and maintained for the transportation of 10 or fewer persons and a truck having an empty weight of 9,000 pounds or less and a gross weight of 11,000 pounds or less.
Vehicles that qualify include cars, minivans, sport utility vehicles and pickup trucks of a certain weight.
Vehicles and motorcycles must be registered in S.C. to qualify.
- To calculate and claim the credit amount and for personal tax records, taxpayers must save receipts and invoices from fuel purchases and vehicle preventative maintenance costs (such as new tires, oil changes and regular vehicle maintenance) beginning in January 2018.
Fuel receipts or credit card statements must show the number of gallons purchased in S.C. during the tax year.
The maintenance invoices must show the car model, amount and type of preventative maintenance work performed in S.C.
Fuel purchased outside of S.C. and preventative maintenance performed outside of S.C. may not be used in determining the credit.
- Taxpayers receive a credit on the lesser amount paid for either the motor fuel user fee increase or the vehicle's preventative maintenance; and
- Taxpayers will calculate and claim the credit on Form I-385 when filing state income tax returns in 2019 (This form will be available in January 2019).
For additional information, including examples regarding the provisions of this tax credit, see SC Revenue Ruling No. 17-6, Refundable Motor Fuel Income Tax Credit or visit https://dor.sc.gov/about/whats-new.